Exactprep IIA-CIA-Part2 Questions

 To assess the effectiveness of management’s self-assessment activities regarding the risk management process, internal auditors should directly observe and test the control and monitoring procedures.

 This hands-on approach allows auditors to verify the implementation and functionality of risk management controls and the accuracy of related reporting.

 Direct observation and testing provide the most reliable evidence of the effectiveness of these procedures

The engagement objective is to assess consistency of quality control practices across multiple factories. The best test is direct, real-time observation (B) of how employees actually perform checks, as this provides reliable, first-hand evidence of whether procedures are followed consistently.

Option A (policies) and D (flowcharts) only show how processes should work.

Option C (interviews) gives management’s perspective but not actual practice.Thus, Option B provides the most valid evidence.

A. The decision affects the test procedures performed:Correct. The choice between statistical and nonstatistical sampling affects the design of the sample selection, execution of audit procedures, and the nature of conclusions drawn. Statistical sampling involves probabilistic techniques that influence sample size and evaluation, whereas nonstatistical sampling relies on auditor judgment.

B. The auditor's response to errors detected will be influenced:While error response is critical, it is influenced more by the nature and materiality of the errors than by the sampling approach.

C. The competence of the evidence obtained is greater with statistical sampling:This is incorrect because the competence of evidence depends on the procedure itself, not the sampling method used. Both methods can yield competent evidence if applied correctly.

D. Nonstatistical sampling may be more cost effective:While this can sometimes be true, it is context-dependent and not universally applicable, so it is not the best answer.

CIA Exam Syllabus Reference:

Domain II: Risk Management and Control – Sampling Techniques and Audit Evidence.

The primary reason for interviewing operational management during engagement planning is to understand the objectives of the area or process under review. This ensures that the audit aligns with business goals and assesses the relevance of internal controls.

Validating the engagement work program (A) occurs later in the planning process.

Assessing management’s knowledge of risks and controls (C) is important but not the primary purpose of interviews.

Reviewing past action plans (D) is relevant for follow-up audits, not initial engagement planning.